IT · Middlesex, NJ · Member since 2015 · 24 posts · 9 votes
Need some advice on which direction to take on my next investment.
These are my options....
Buy and hold a SFH/Townhouse, cash with no financing. Will be renting out so it will be making an income which will be taxed. This option costs 50k and rental income would be around $1000 per month.
OR
Buy a duplex with financing. Will have 2 tenants paying down mortgage. This option costs 130k, rental income would be around $1500.
Which is a better option in terms of growth? Of course, my ultimate goal is to keep going and eventually quit my day job and do this full time.
Financing leverages both your return and your risk. Most of the people I know who have had really bad real estate experiences got upside down on loans, could not pay or refinance and ended up losing all their equity. On the other side, if you can use other people's money to increase your yield, then it makes great sense. Use financing.... but be careful out there. :)
I ALWAYS look to use other people's money. :) Leveraging is what allows you to make a LOT of money without having to have a LOT of money in the first place. :)
Besides, cash flow early on is crucial. That extra $500 a month will give you the money for a down payment that much faster for your next property. :)
Thanks guys for your insight. I got a second question for you folks that are in mortgage industry. I was recently told by an agent that banks are not interested in financing properties in the 50k range.
Thanks guys for your insight. I got a second question for you folks that are in mortgage industry. I was recently told by an agent that banks are not interested in financing properties in the 50k range.
Is that a correct assessment?
I'm not in the mortgage industry, but I can tell you that a lot of banks don't like going below $50k for properties. HOWEVER, I did find a bank that has no qualms about going below that amount. My current lowest loan is for $21,300. It took me talking to 8 banks before I found this one. They are out there, but they are rare. :)